Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92843
Authors: 
Miyagiwa, Kaz
Year of Publication: 
2007
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 704
Abstract: 
We examine whether cooperation in R&D leads to product market collusion. Suppose that firms engage in a stochastic R&D race while maintaining the collusive equilibrium in a repeated-game framework. Innovation under competitive R&D creates inter-firm asymmetries, which destabilizes the collusive equilibrium. Innovation sharing through cooperative R&D preserves symmetries, thereby facilitating collusion. Sharing an efficient technology also increases industry profit, which contributes to the collusion stability but also raises social welfare. Interestingly, a welfare improvement is less likely if innovation leads to a large cost reduction. The effect of licensing under competition R&D is also examined.
Subjects: 
Collusion
Research Joint Ventures
Innovation
R&D
JEL: 
L12
L13
Document Type: 
Working Paper

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